Guitar Center, Inc. Announces Second Quarter 2005 Results Consolidated Net Sales Up 18.5%; Consolidated Net Income Up 6.3%; Diluted EPS of $0.46 Includes Acquisition Charges of $0.07 Related to Music & Arts Center Transaction.WESTLAKE Westlake, city (1990 pop. 27,018), Cuyahoga co., NE Ohio, a suburb of Cleveland; inc. as a city 1956. A growing city, its various manufactures include ink and plastics. VILLAGE, Calif. -- Guitar Center, Inc. (Nasdaq:GTRC GTRC Grid Technology Research Center (Japan) GTRC Greensboro Truth and Reconciliation Commission (North Carolina) ) today announced financial results for the second quarter ended June June: see month. 30, 2005. Consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 18.5% to $402.3 million from $339.6 in the second quarter of last year. Consolidated net income increased 6.3% to $12.9 million, or $0.46 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $12.1 million, or $0.45 per diluted share. The Company's second quarter net income includes charges of $2.1 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. , or $0.07 per diluted share, related to the acquisition of Music & Arts Center, Inc. Excluding those acquisition charges, second quarter net income increased 24% to $15.0 million, or $0.53 per diluted share. Second quarter weighted average number of diluted shares outstanding was 29.8 million compared to 28.9 million in the same period of 2004. Commenting on first quarter results, Bruce Ross Bruce Ross is an Canadian poet, author, humanities educator and past president of the Haiku Society of America. He was born in Burlington, Ontario. Ross has taught Japanese poetry (in translation) and painting forms for many years at a number of institutions, including , Chief Financial Officer of Guitar Center, stated, "Our bottom line results for the quarter were better than anticipated as we continued to leverage operating efficiencies in our Guitar Center and direct response divisions. Our Guitar Center stores outperformed both our sales and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. expectations. Five new store openings and our continuing focus on merchandise planning Merchandise Planning is a strategic and systematic approach used by retailers, particularly in fashion and non-food areas. It is aimed at maximising return on investment, through planning and monitoring sales, margins and inventory in order to increase profitability. and generating store traffic contributed to a 14.0% net sales increase for the quarter. Despite competitive factors, Musician's Friend ''' Musician's Friend is America's largest direct response retailer of musical instruments and related gear. Musician's Friend was founded in 1983 by Robert and Deanna Eastman, eventually relocating its headquarters from San Diego to a dairy barn in Southern Oregon. achieved better than expected operating income. Finally, we are pleased to have successfully completed the acquisition and integration of Music & Arts, which generated results in line with our expectations for the quarter." Guitar Center Stores During the quarter, we opened large format Guitar Center stores in Jacksonville, Florida “Jacksonville” redirects here. For other uses, see Jacksonville (disambiguation). Jacksonville is the largest city in the state of Florida and the county seat of Duval County. and Syracuse, New York
Syracuse (IPA: and small format stores in Youngstown, Ohio
Youngstown is a city in the U.S. state of Ohio and the county seat of Mahoning County. The municipality is situated on the Mahoning River, approximately 65 miles (105 km) southeast of Cleveland and , Tallahassee, Florida For other uses, see Tallahassee (disambiguation). Tallahassee is the capital of the State of Florida and the county seat of Leon County. Tallahassee became the capital of Florida in 1824. As of 2006, the population recorded by the U.S. and Jackson, Mississippi Jackson is the capital and the most populous city of the U.S. State of Mississippi. It is one of the county seats of Hinds County; Raymond is the other county seat. As of the 2000 census Jackson's population was 184,256. . Net sales from Guitar Center stores increased 14.0% to $299.6 million from $262.9 million in the second quarter of 2004, with sales from new stores contributing $18.5 million and representing 50.3% of the total increase. Comparable store sales for the Guitar Center stores increased 7%. Gross margin, after buying and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal , increased to 26.8% from 26.0% in the second quarter last year. The increase is primarily due to a higher selling margin partially offset by increased freight costs and higher occupancy costs. Selling, general and administrative expenses for the Guitar Center stores, inclusive of inclusive of prep. Taking into consideration or account; including. corporate general and administrative expenses, were 20.3% of net sales compared to 20.6% in the year-ago period. The improvement compared to the second quarter of 2004 is primarily due to decreased advertising and promotional costs and lower salary costs as a percentage of sales. Musician's Friend Direct response net sales for the quarter increased 14.4% to $78.0 million from $68.2 million in last year's second quarter. Gross margin for Musician's Friend was 31.6% compared to 33.7% in the prior year period, reflecting a lower selling margin due to increased competitive pressure partially offset by a decrease in freight costs. Selling, general and administrative expenses for the second quarter were 21.8% of net sales versus 21.4% in the comparable period last year. The increase primarily reflects a planned increase in advertising expenses, partially offset by a reduction in bonus expense. Music & Arts We completed our acquisition of Music & Arts Center, Inc. on April 15, 2005 and the acquired business and our former American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Music business were combined into a new division that operates under the Music & Arts name. Second quarter 2004 results only reflect results from our former American Music stores and do not include results from the acquired business. Net sales from our Music & Arts division were $24.7 million compared to $8.6 million in the second quarter of 2004. Comparable store sales for the Music & Arts division increased 3%. Gross margin for Music & Arts increased to 41.7% versus 33.1% in the same period last year. Selling, general and administrative expenses for Music & Arts were 59.4% of net sales compared to 50.8% in the second quarter of 2004. The division incurred an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $4.4 million for the quarter, in line with expectations. The Company's Music & Arts division second quarter results include the effects of the acquisition, including the previously noted acquisition charges of $3.4 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($2.1 million after-tax, or $0.07 per diluted share), resulting primarily from the elimination of a redundant point of sales system, severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, and moving expenses to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. certain American Music employees to the Music & Arts corporate office in Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . Business Outlook To date in the third quarter we have opened a small format store in Greenville, South Carolina
Greenville is a mid-sized city located in the upstate of South Carolina. It is the county seat of Greenville CountyGR6 , which was our 150th Guitar Center store. On Thursday Thursday: see week. , we are scheduled to open a small format Guitar Center store in Wichita, Kansas
Wichita, also known as the Air Capital of the World, is the largest city in the U.S. state of Kansas, as well as a major aircraft manufacturing hub and cultural center. . Additionally, we plan to open another three small format and two large format stores during the third quarter. Based on current business and economic conditions, we continue to anticipate third quarter 2005 consolidated net sales will be in the range of $423.1 million and $434.2 million and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to be between $0.48 and $0.52, as projected on our conference call on May 12, 2005. This guidance assumes, among other things, that we will incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. an additional $0.01 to $0.02 per share of after-tax acquisition charges related to Music & Arts in the third quarter. The comments regarding future financial performance in the immediately preceding paragraph constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and are made in express reliance on the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions contained in Section 21E of the Securities Exchange Act of 1934. This information, as well as other forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information provided, should be read in conjunction with the information under the caption "Business Risks and Forward Looking Statements" below. Teleconference and Webcast Guitar Center will host a conference call and webcast today at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (5:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) to discuss second quarter financial results. Certain financial and other statistical information expected to be presented on the conference call, along with information required under SEC Regulation G, may be accessed on the investor relations Investor relations The process by which the corporation communicates with its investors. section of our corporate web site at www.guitarcenter.com/investors/irsupplemental_java.shtml. To access the call, please dial 800-627-7250 (domestic) or 706-645-9246 (international); conference ID Guitar Center. The webcast will be available on the Company's web site at www.guitarcenter.com or at www.fulldisclosure.com. A replay of the call will be available through August 9, 2005 and can be accessed by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international); pin number 8003194. A replay of the webcast will be available at www.guitarcenter.com. About Guitar Center Guitar Center is the nation's leading retailer of guitars, amplifiers, percussion instruments This is a list of percussion instruments. Tuned percussion
A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Musician's Friend, Inc., and its catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and web site, www.musiciansfriend.com. More information on Guitar Center can be found by visiting the Company's web site at www.guitarcenter.com. Business Risks and Forward Looking Statements This press release contains forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc , among other things, results deemed to be achievable by management in the third quarter of 2005, and store opening plans. Sales and earnings trends are also affected by many other factors including, among others, world and national political events, including the existence of armed conflict involving the U.S., the effectiveness of our promotion and merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. strategies, and competitive factors applicable to our retail and direct response markets. In light of these risks, the forward-looking statements contained in this press release are not guarantees of future performance and in fact may not be realized. Our actual results could differ materially and adversely from those expressed in this press release. Further, the statements made by us above represent our views only as of the date of this press release, and it should not be assumed that the statements made herein remain accurate as of any future date. We do not presently intend to update these statements prior to our next quarterly earnings release and undertake no duty to any person to effect any such update under any circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Investors are also urged to review carefully the discussion under the caption "Risks Related to the Business" in our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2005, which has been filed with the Securities and Exchange Commission and may be accessed through the EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. database maintained by the SEC at www.sec.gov. (Tables follow)
Guitar Center, Inc. and subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
June 30, December
2005(a) 31,
2004
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 9,977 $ 60,453
Investments in marketable securities - 3,810
Accounts receivable, net 23,905 27,627
Merchandise inventories 416,566 314,961
Prepaid expenses and deposits 17,151 13,367
Deferred income taxes 5,137 5,552
-------- --------
Total current assets 472,736 425,770
Property and equipment, net 124,176 97,349
Investments in marketable securities - 16,997
Goodwill 78,412 26,474
Deposits and other assets, net 13,217 8,003
-------- --------
$688,541 $574,593
======== ========
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable $ 94,930 $ 49,771
Accrued expenses and other current liabilities 65,550 83,606
Merchandise advances 19,792 22,534
Revolving line of credit 38,092 -
-------- --------
Total current liabilities 218,364 155,911
Other long-term liabilities 10,206 6,943
Deferred income taxes 7,411 5,057
Long-term debt 100,000 100,000
-------- --------
Total liabilities 335,981 267,911
Stockholders' equity:
Preferred stock; 5,000 authorized, none issued
and outstanding - -
Common Stock, $0.01 par value, authorized
55,000 shares, issued and outstanding
25,944 at June 30, 2005 and 25,359 at
December 31, 2004 260 254
Additional paid in capital 322,382 305,305
Retained earnings 29,918 1,123
-------- --------
Stockholders' equity 352,560 306,682
-------- --------
$688,541 $574,593
======== ========
(a) Purchase price accounting related to the Music & Arts Center, Inc.
acquisition completed April 15, 2005 is being finalized and, as a
result, there may be a subsequent reclassification of certain
items presented on the balance sheet as of June 30, 2005.
Guitar Center, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three months ended
June 30,
2005 2004
--------- ---------
Net sales $402,296 $339,622
Cost of goods sold, buying and occupancy 286,956 245,409
-------- --------
Gross profit 115,340 94,213
Selling, general and administrative expenses 92,429 73,200
-------- --------
Operating income 22,911 21,013
Interest expense, net 1,915 1,425
-------- --------
Income before income taxes 20,996 19,588
Income taxes 8,085 7,444
-------- --------
Net income $ 12,911 $ 12,144
======== ========
Net income per share
Basic $ 0.50 $ 0.49
======== ========
Diluted $ 0.46 $ 0.45
======== ========
Weighted average shares outstanding
Basic 25,885 24,676
======== ========
Diluted 29,836 28,859
======== ========
Guitar Center, Inc. and subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Six months ended
June 30,
2005 2004
--------- ---------
Net sales $798,682 $689,325
Cost of goods sold, buying and occupancy 572,170 500,429
-------- --------
Gross profit 226,512 188,896
Selling, general and administrative expenses 176,900 147,518
-------- --------
Operating income 49,612 41,378
Interest expense, net 2,790 2,788
-------- --------
Income before income taxes 46,822 38,590
Income taxes 18,027 14,666
-------- --------
Net income $ 28,795 $ 23,924
======== ========
Net income per share
Basic $ 1.12 $ 0.98
======== ========
Diluted $ 1.02 $ 0.89
======== ========
Weighted average shares outstanding
Basic 25,740 24,432
======== ========
Diluted 29,780 28,636
======== ========
Guitar Center, Inc. and subsidiaries
Supplemental Financial Data
(In thousands, except per share data)
Three Three
months months
ended ended
June 30, June 30,
2005 2004(c)
---------- --------
(in thousands, except
per share amounts)
Calculation of diluted earnings per share
Net income $12,911 $12,144
Add back interest, net of tax, on 4% Senior
Convertible Notes (a) 727 733
---------- --------
Net income excluding interest expense on 4%
Senior Convertible Notes 13,638 12,877
---------- --------
Basic weighted average shares outstanding 25,885 24,676
Dilutive effect of stock options outstanding 1,059 1,291
Incremental shares on assumed conversion of 4%
Senior Convertible Notes (b) 2,892 2,892
---------- --------
Diluted weighted average shares outstanding 29,836 28,859
========== ========
Diluted net income per share $0.46 $0.45
========== ========
(a) Represents the interest expense, including amortization of
deferred financing costs, on the 4% Senior Convertible Notes, net
of tax, using an effective tax rate for 2005 of 38.5% and for 2004
of 38.0%.
(b) Represents the number of incremental common shares resulting from
the conversion of the 4% Senior Convertible Notes.
(c) Financial data for the three months ended June 30, 2004 has been
restated to conform to EITF 04-08 issued in November 2004.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion